Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor provides marketing and data services to Validea.ca and receives compensation. Try it.
United Fire Group Inc. provides insurance protection for individuals and businesses through several regional property and casualty insurance and life insurance companies. Its property and casualty insurance subsidiaries are licensed in 43 states plus the District of Columbia and are represented by approximately 1,200 independent agencies. Its life insurance subsidiary is licensed in 37 states and is represented by approximately 1,000 independent agencies. It has a $900-million (U.S.) market cap.
The company has grown earnings at a 19-per-cent pace (using an average of the 3- and 5-year EPS growth rates) over the long term. Its EPS growth rate and 10.0 P/E ratio make for a 0.52 PE-to-growth ratio, which the Peter Lynch model likes.
Its 88 relative strength impresses the Momentum Investor model. The Momentum Investor model also likes its accelerating growth: 40.5 per cent two quarters ago and 7,600 per cent last quarter.
United Fire Group also has a 22-per-cent equity/assets ratio and 2.4-per-cent return on assets rate, handily beating the 5 per cent and 1 per cent targets the Lynch model uses on financials.
The company has strong free cash flow ($4.84/share), low PEG ratio, and 9.2-per-cent after-tax profit margins help it earn interest from the Motley Fool inspired model.
It has averaged an 18.7-per-cent return on retained earnings (those not paid out as dividends) over the past decade, which the Warren Buffett model likes. The company also has 16.7-per-cent free cash flow yield.
John Reese owns UFCS.
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